Copper Prices Reports: Copper stunning rally toward all-time highs above $10,000 is accelerating, with bulls swarming in to profit as stimulus measures, vaccine rollouts and climate pledges fuel a global recovery from the pandemic.
Copper extended gains to the highest in a decade on Tuesday as global growth underpinned a rally in metals markets ranging from aluminum to iron ore, which by one measure reached a record high. Commodities are advancing toward the highs of the last super-cycle, when prices spiked in the early 2000s on a jump in Chinese orders.
Is copper in high demand?
Just as copper demand is set to soar once more, there are mounting concerns that producers will struggle to plug the gap as they battle technical and regulatory pressures. In top producer Chile, a group of port workers began protests against the government’s pandemic relief policies this week, threatening near-term supplies. In the longer term, producers worry that plans to boost mining royalties could stifle investment and make the country less competitive.
“While demand may have done as much as it can for the shorter-term cycle, supply bottlenecks both in raw materials and in freight continue to support,” BMO Capital Markets analysts including Colin Hamilton said in an emailed note. “Meanwhile, positive medium-term global growth dynamics continue to boost financial market interest in commodities as a whole.”
Copper Prices Surges Toward $10,000 as Bulls Bet
Metals led by copper, a barometer of the global economy, are benefiting as the world’s largest economies announce stimulus programs and climate pledges while rebuilding from the pandemic shock.
Copper rose as much as 2.2% to $9,965 a metric ton on the London Metal Exchange, the highest level since March 2011, before settling at $9,855.50 at 5:51 p.m. local time. Prices hit a record $10,190 in February 2011. Aluminum declined after touching a three-year high. Steel prices are spiking from Asia to North America. The Platts Iron Ore Index, which assesses iron ore delivered to top producer China, rose to a record $193.85 a dry metric ton, according to data from S&P Global Platts.
Despite all the bullishness, near-term copper demand from China may weaken. The top user may ship more of the metal overseas amid weaker-than-expected domestic demand, with the so-called arbitrage window for exports opening up for traders for the first time since September, according to Shanghai Metals Market.
This development “may potentially deter some speculative buying in London in the very short term,” said Wenyu Yao, senior commodities strategist at ING Bank.
- Benchmark copper on the London Metal Exchange was up 1.9% at $9,736 a tonne at 1140 GMT
- Prices of the industrial metal earlier hit $9,750 a tonne, the highest since August 2011
- Iron ore also surges to new high amid spiking steel prices
- Palladium pares gains after climbing toward $3,000 an ounce
In other markets, gold was steady as traders awaited the outcome of a two-day Federal Reserve policy meeting. The central bank has primed investors for no major changes in its language on inflation and rate expectations.
Spot gold fell 0.2% to $1777.59 an ounce, after gaining 0.2% on Monday. Futures for June delivery on the Comex fell 0.1% to settle at $1,778.80 an ounce. Spot silver rose while platinum edged lower.
Palladium pared gains after climbing toward $3,000 an ounce amid bets on surging demand from automakers and supply issues at top miner MMC Norilsk Nickel PJSC. HSBC Holdings Plc said the metal could rise past $3,100 an ounce due to a widening deficit, before dropping to $2,740 by the end of the year.
“High prices will likely encourage the mobilization of largely unquantifiable above ground stocks,” analyst James Steel wrote in a note, while substitution of cheaper platinum in auto-catalysts should start to clip demand.
“The Chile news helped, but there was already a lot of momentum based on a few things including stocks and the dollar,” a metals trader said. “Chinese demand moving into the seasonally strong period is another factor.”
CHILE: Mining unions in Chile have threatened to protest if the government does not drop a bid to block Chileans from drawing down more of their pensions savings early, while port workers have called for a general strike.
INVENTORIES: Stocks of copper in LME registered warehouses at 155,100 tonnes have fallen about 10% over the past couple of weeks.
Cancelled warrants, metal earmarked for delivery, at 53% indicate more copper will soon be leaving LME warehouses.
This alongside one large holding of copper warrants and cash contracts <0#LME-WHC> have fuelled worry about supplies on the LME market and created a premium for the cash over the three-month contract .
COPPER DEMAND: China accounts for around half of global copper consumption estimated at around 24 million tonnes this year. Its demand rises in the second quarter ahead of a pick up in construction activity over the summer months.
Surveys of purchasing managers in China’s manufacturing sector later this week and early next week will be closely watched for clues to demand prospects.
DOLLAR: A lower U.S.currency makes dollar-denominated metals cheaper for holders of other currencies, which could boost demand. This is a relationship used by funds to generate buy and sell signals from numerical models.
OTHER METALS: Aluminium was up 1.4% at $2,398 a tonne, zinc rose 1.1% to $2,884, lead gained 1.1% to $2,081, tin climbed 0.6% to $26,950 and nickel added 0.7% to $16,505.